With a thicket of
high-profile lawsuits pending against Enron and its henchmen, it’s time
to review President Bush and Ken Lay’s ménage a trois with tort
reform.

In a January 1994 speech following his election as chair of Houston’s
leading business booster group, “Kenny Boy” Lay raised the topic of lawsuit
abuse in conjunction with his lifelong obsession with defending shareholder
interests. Denouncing run-away litigation, Lay warned that, “Many of us
who love this city and state wonder whether it is prudent for our shareholders
to keep operations or headquarters in this state.”

Later that year, Lay wrote two things that kept Enron in Texas: (1)
His first check to the newly formed Texans for Lawsuit Reform PAC; and
(2) A letter to newly elected Governor George W. Bush urging him to slash
legal liabilities to prevent corporate flight from Texas. It was the beginning
of a beautiful relationship.

Although neither one of them advertises it now, Bush and Texans for
Lawsuit Reform (TLR) both count Ken Lay among their top donors. The largest
single source of Bush’s gubernatorial money was Enron’s PAC and executives
($312,500). Another 10 percent of the $41 million that Bush raised for
his gubernatorial races came from the tort-reform lobby—led by TLR.

Bush gave Lay and other tort-sensitive big donors a fast payback after
he won his first election with just 53 percent of the vote. In his first
months in office, Governor Bush fast-tracked tort reform by declaring it
a legislative “emergency.” Tort laws that Bush signed in 1995 include:

Slashing punitive damages (used to punish the worst wrongdoers) to $200,000
or two times the economic damages inflicted;

Raising the threshold needed to be held jointly liable from 11 percent
of total re-sponsibility for an injury to 51 percent.

TLR's Auditors

Donor

TLR Money*

TX Society of CPAs

$83,334

Price Waterhouse

$33,332

Ernst & Young

$18,097

Arthur Anderson

$16,667

Deloitte & Touche

$16,667

TOTAL:

$168,097

*1994 through 2001 PAC contributions.

Like Lay, many wealthy interests simultaneously bankrolled Bush and the
TLR PAC, which has raised $5,610,315 to influence Texas politicians since
its 1994 inception. More than half of this TLR PAC money ($2,850,834) came
from just 20 donors—most of whom made fortunes in toxic chemicals, construction,
energy or other dangerous industries with elevated legal liabilities.

The only non-tycoon among TLR’s top-20 donors is the Texas Society of
Certified Public Accountants ($83,334 to TLR). In fact, four of the Big
Five accounting firms (including Enron auditor Arthur Andersen) directly
contributed to TLR’s PAC, pushing its total accountant industry contributions
to $168,097.

20 Donors Gave 51% of TLR's PAC Money

Donor*

Business

TLR PACDonations

Robert McNair

Cogen Technologies (electricity)

$475,000

Richard Weekley

David Weekley Homes

$442,000

Harlan Crow

Trammell Crow (real estate)

$331,500

Gordon Cain

Sterling Group (chemicals)

$240,000

William McMinn

Sterling Group (chemicals)

$190,000

James Leininger

Kinetic Concepts (hospital beds)

$175,000

Bob Perry

Perry Homes

$140,000

Harold Simmons

Contran (takeovers/toxic waste)

$130,000

David Underwood

Everen Securities

$97,500

TX Society of CPAs

Accountant trade group

$83,334

Kenneth Lay

Enron Corp.

$80,000

Terry Huffington

Huffco, Inc. (oil/gas)

$65,500

Peter O'Donnell

First National Bank

$65,000

Dan Duncan

Enterprise Products (oil/gas)

$58,000

Michael Stevens

Stevens Interests (apartments)

$56,000

James Lightner

Electrospace Systems (defense)

$53,500

Robert Folsom

Folsom Investments (developer)

$50,500

Andrew Beal

Beal Bank/Beal Aerospace

$45,000

T. Boone Pickens

Mesa Oil

$37,000

S. Reed Morian

DX Holding Co. (chemicals)

$36,000

TOTAL:

$2,850,834

*Includes 1994 through 2000 donations by family members.

A TLR-backed bill to protect accountants who sign off on cooked books floundered
in 1997. Members of a Texas House committee let the bill die after the
accountants could not provide any numbers to back their claim that they
were victims of runaway lawsuits.

Enron litigationAt a time when Enron-related decision makers face a barrage of litigation
(if not criminal charges), Ken Lay now looks prescient in his 1994 obsession
with granting legal protection to busi-nesses that harm people or communities.
But Ken Lay and Enron frequented the courts long before Enron’s collapse.

Even as the Bush tort revolution got underway in 1995 and 1996, Enron
was hit with 18 personal injury and damage suits in Harris County state
district courts. These included:

Such lawsuits are nothing compared to what businesses file against each
other. In 1997, for example, Enron said it would pay $440 million to settle
claims filed after it reneged on gas contracts to supply its European power
plants.

From 1998 through 2001, Enron was a party to dozens of civil cases in
Harris County state district courts, often appearing as the plaintiff in
contract disputes that pitted one business against another. Contract disputes
accounted for far more of Enron’s litigation docket than did the personal
injury claims that the business lobby focuses on.

Lay litigationIn 1986 Ken Lay sued a motorist who rear-ended his daughter’s car.
Represented by Vinson & Elkins, Lay sued a special education aide,
seeking $6,025 for car damages and another $4,000 for such things as Robyn
Lay’s “pain and suffering” and “mental anguish.” Under questioning,
the plaintiffs admitted that Robyn did not seek medical attention until
a week after the accident and that their insurer had paid their car repair
bill—which was half of what they demanded.

TLR PAC's Enron Money

Enron Donor

TLR PAC Money

Ken Lay

$80,000

Forrest Hoglund

$11,500

Enron PAC

$5,000

Edward Gaylord

$5,000

Other Enron employees

$1,750

TOTAL:

$103,250

*1994
through 2001

Lay committed tort-reform heresy as chair of the University of Houston
Regents in 1991 by pursuing justice through litigation. After the regents
voted to sue university financial officers who were indicted in a $600,000
kickback scheme, Lay said, “We hope this action will help us recover lost
funds and bring this matter to justice.”

Despite Bush’s “tort reforms,” many people wish the same today for the
workers and investors who are suing Enron’s officers, directors and auditors.•

# # #

Texans for Public Justice is a non-partisan, non-profit policy &
research organization which tracks the influence of money in politics.